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Micron’s Current Stock Rally: Is It Different This Time?

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Part 9
Micron’s Current Stock Rally: Is It Different This Time? PART 9 OF 13

Micron: The Top-Performing Semiconductor Stock of 2017

Micron becomes the top-performing semiconductor stock of 2017

Micron Technology (MU) is not the same company that it was two years ago, which is visible from its stock price. Micron’s stock price has surged 16.0% during the last week and outperformed the memory market, which rose 14.4%. 

This strong growth came after its fiscal 4Q171 earnings reached a 15-year high. The stock was one of the most highly traded stocks on the NASDAQ on September 27, 2017, a day after its earnings release.

Micron: The Top-Performing Semiconductor Stock of 2017

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Micron took over NVIDIA’s (NVDA) spot as the top-performing semiconductor stock of 2017, returning 82.5% since the start of 2017. This return exceeds NVIDIA’s capital return of 68.0% and the memory market’s return of 75.0%. 

The memory market’s returns are well above the S&P 500 Index (SPY), which rose 14.7% year-to-date. In this article, we are comparing Micron with the memory market.

What is driving Micron stock to new highs?

Micron (MU) is currently trading at its all-time high, which is above $39.0. The last time the stock crossed $36.00 was in 2014, when there was a DRAM2 undersupply. The stock fell sharply in 2015 and 2016 and fell to as low as $9.50 in May 2016 due to a DRAM oversupply. A stock with such volatility raises concerns about the sustainability of the recent upturn.

Analysts were concerned that Samsung (SSNLF), SK Hynix, and China (FXI) would create a global oversupply of memory chips in the future, sending Micron’s stock price down to single digits.

However, Micron reassured investors about the global supply scenario for 2017 and 2018. The secular demand growth arising from the advent of AI (artificial intelligence) is reducing Micron’s volatility. Moreover, the focus on specialized memory could bring some degree of stability in its stock price growth.

These strong market dynamics have attracted institutional investors to Micron. We’ll look into institutional investors’ trading in Micron in the next article.

  1. fiscal 4Q17 ended August 31, 2017
  2. dynamic random access memory
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